Borrow interest-free for three years! The best balance transfer credit cards to help clear your debts

Generous introductory offers on balance transfer credit cards have been steadily re-emerging in the years since the credit crunch. With proper use they can provide the cheapest escape route for those resolved to clearing their debts.

Freedom: Balance transfer cards are a useful tool to help you get out of debt.

Switching your debts to a balance transfer card can speed up the repayment of debt because most, or all, of your repayment goes toward wiping out the balance and not paying interest. The best deals offer up to two years of 0 per cent interest in exchange for a switching charge.

Those with short to medium-term debts can use such offers to finally get out of the red, while those with much more to repay can look to these cards to provide a lower cost alternative to their existing debts.

But beware: there are caveats to consider and
barriers to overcome when applying for such cards (see box).

Many
balance transfer cards also come with a 0 per cent period for new
purchases as well - card companies aren't providing cheap credit as a
favour, they want you to spend more on the card and maintain that new
debt, which is much more profitable for them.

Remember, you are trying to repay your debts, not build up more. So think hard before buying anything else with credit.

This is Money has compiled a selection of the best deals currently available in the balance transfer market.

This page is kept updated throughout the year - bookmark it for the very latest developments.

Longest interest-free period cards

Market leader:

The never-ending battle for the top spot of the best buy tables continues, and now you can use a balance transfer card to move your debts and pay them back interest-free for three years.

It is only available direct so you won't find it on comparison websites.

The credit card comes with a 3.5 per
cent fee, which means you would pay £35 to transfer over £1,000 from
other credit cards.

But if you transfer the balance within 60 days of opening the account you will receive a refund on your transfer fee, bringing it down to 2.99 per cent.

The money will be credited to your account after your balance transfer has been successfully completed.

But you will be hit with 18.9 per cent interest after the introductory period ends. Any amount you transfer must not exceed 90 per cent
of the credit limit on the card.

Virgin Money recently launched a balance transfer card - the Virgin Balance Transfer Credit Card - that also allows customers up to 36 months to pay off debt moved to the card.

It charges a higher fee of 3.49 per cent on transfers.

However, the selling point for this card is that it also allows for money transfers, which means customers can transfer their credit card allowance to a bank account - to pay off an overdraft, for example, or other loans.

Virgin charges a 4 per cent fee on money transfers, which means it would cost £120 to pay off a £3,000 overdraft.

Those accepted for the account will also benefit from six months of interest free purchases.

Barclaycard also offers the second best deal with a 34 month offer which also has a discount on a 3.5 per cent transfer fee meaning you would pay 2.74 per cent.

For a 2.8 per cent transfer fee (if transferred within three months), Halifax's Balance Transfer Card offers 34 months interest-free on balance transfers and six
months 0 per cent interest on purchases. The rate then reverts to 18.9 per cent

The Tesco Cubcard Credit Card chargesa marginally higher 2.9 per cent fee to move debt to the card and only three months interest-free on purchases. Standard interest is charged at 18.9 per cent by both Sainsbury's and Tesco.

MBNA has a 32-monthPlatinum balance transfer card, which also has a transfer fee of 2.69 per cent. If you want to make a money
transfer to use for paying off an expensive overdraft or loan you will
pay a 4 per cent handling fee.

By applying for the card through this is Money's partner service MoneySuperMarket here, consumers will be granted a reduced money transfer fee of 2.69 per cent, compared to the standard 4.00 per cent charge.

RESTRICTIONS ON BALANCE TRANSFER CARDS

In theory, those with the best credit ratings are the most likely to be approved for a card as they will have a history of paying off debt on time and have a stable income.

It is more probable that those with poor credit ratings will be rejected.

Those who are refused should bear in mind that applying for a number of other balance transfer cards in a short space of time will worsen their credit rating.

Many card providers will not allow you to transfer balances from another of its own products, so you should identify the best deal for you outside of your existing providers before making an application.

Some providers meanwhile may only accept your application if you already hold a current account with them.

There are other restrictions you will also have to satisfy, such as having a minimum level of income (generally £10,000-£20,000).

And to take advantage of introductory 0 per cent offers, you will have to transfer your balance within a specified time-frame.

Lowest handling fee cards

For those confident they can pay off their credit card debts in a short space of time, then getting a balance transfer card with a lower handling fee, but lower interest-free period, can limit the extra charges on your debt.

Competition is tight with the top four our five providers offering fees below one per cent and fairly decent balance transfer windows too.

Market leader:

Santander's 123 Credit Card pays out up to 3 per cent cashback on top of a 23 month interest-free window for both purchases and balance transfers - the longest available deal for those wanting to transfer debt and buy items without clocking up extra charges.

Even better, there is no balance transfer fee.

However this is offset by a hefty £24 annual card cost.

Customers that open a 123 Current Account at the same time can avoid this charge for the first 12 months.

You could also get a Santander Credit Card which is fee free, but offers a much lower 0 per cent offer on purchases and balance transfers for 15 months.

It offers 12 months 0 per cent interest on both balance transfers and purchases as well as offering clubcard rewards for spending.

After the introductory period ends interest is charged at 18.9 per cent.

Fluid's Low Balance Transfer card appears next on the best-buys table with a 0.35 per cent fee on balance transfers. It offers 10 months interest free on shifted debts as well as 3 months 0 per cent on purchases. Standard interest is charged at 19.9 per cent.

Lloyds Bank's Platinum Purchase credit card that charges just 0.4 per cent to shift existing debts. It comes with 10 months interest fee on both balance transfers and purchases.

Cardholders will be charged 3 per cent but the rate is reduced to 0.4 per cent via refund if the transfer is made within the first 90 days. Standard interest is charged at 18.9 per cent.

This comes with 0 per cent interest on purchases for 15 months. 0.5 per cent cashback on purchases and unlimited commission free purchases while overseas.

The Select Credit Card has a standard rate of 15.9 (APR) per cent.

Best low rate balance transfers

People who have racked up substantial credit card debt which is unlikely to be paid off within two years can plump for balance transfer cards which offer lower rates of interest.

However, those who are considering this option should seek advice as to whether there might be a better deal to be a had consolidating such debts into a loan, particularly with borrowing rates at record lows at the moment.

Both offer Advance credit cards with interest on balance transfers of 4.9 per cent for the first 12 months. After that the rate reverts to the standard card rate of 11.9 per cent which is still significantly lower level of interest than typical credit cards.

You will pay a three per cent transfer fee and in order to get the introductory rate you will have to transfer your balance in the first 60 days.

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